Download F14_02 - Installment Loans - Amount Financed

Students:
Today is a red light day.
Cell phone use is prohibited.
This is your warning.
1) Find the interest owed and the maturity value of
a single – payment loan of $ 500.00 at an exact
interest rate of 3.75 % for a term of 60 days.
Interest = $ 500.00 x 3.75 % x
60
365
= $ 3.08
Maturity Value = $ 500.00 + $ 3.08 = $ 503.08
2) Find the interest owed and the maturity value of a
single – payment loan of $ 1350.00 at an ordinary
interest rate of 2.5 % for a term of 120 days.
120
Interest = $ 1350.00 x 2.5 % x
360
= $ 11.25
Maturity Value = $ 1350.00 + $ 11.25 = $ 1361.25
14.02
Installment
Loans:
Amount Financed
Installment loans are repaid in equal
payments over a specified period of time.
Installment loans usually require a
down payment to purchase an item.
A down payment is a portion of the
price paid in advanced before
financing the rest on credit.
The amount financed is the portion
of the purchase that is still owed.
Amount Financed
= Cash Price – Down Payment
Down Payment
= Cash Price x Percent
Item
Cash Price
Down Payment
Cash
Percent
Down Payment
in Dollars
Amount
Financed
$ 800.00
$ 250.00
--------
$ 250.00
$ 550.00
Vacation $ 2500.00
--------
2.50 %
$ 62.50
$ 2437.50
TV
Car
$ 8664.99
$ 1500.00
--------
$ 1500.00
$ 7164.99
Bike
$ 450.00
--------
5.00 %
$ 22.50
$
427.50
Find the amount financed if kitchen furniture
is purchased for $ 1500.00 with a $ 375.00
down payment.
Amount Financed = $ 1500.00 – $ 375.00
= $ 1125.00
Find the amount financed if a washer/dyer
combination is purchased for $ 1298.75
with a $ 500.00 down payment.
Amount Financed = $ 1298.75 – $ 500.00
= $ 798.75
Find the down payment and the amount
financed if a vacation package is purchased
for $ 4500.00 with a 25 % down payment.
Down Payment = $ 4500.00 x 25 %
= $ 1125.00
Amount Financed = $ 4500.00 – $ 1125.00
= $ 3375.00
Find the down payment and the amount
financed if bedroom furniture is purchased
for $ 2549.95 with a 15 % down payment.
Down Payment = $ 2549.95 x 15 % = $ 382.49
Amount Financed = $ 2549.95 – $ 382.49
= $ 2167.46